Tuesday, July 13, 2010

Corn and Cellulosic Ethanol Fight for Viability, Government Favor

Nebraska Senator Ben Nelson is calling for the EPA to move quickly on increasing the allowable blend of corn ethanol in gasoline by 50 percent, saying that regulatory agency has studied the issue �Sto death,⬝ and that delays on the ruling have �Sput energy security at risk.⬝ Meanwhile, the EPA has proposed a reduction in the federal cellulosic ethanol blend mandate, saying that the infrastructure doesn't exist yet to meet targets. This news comes on the heels of a string of setbacks that have hit the American biofuels industry of late, leading to questions about whether it will ever make good on the promise it was once considered to hold.

More Money, More Problems

President Bush's 2006 State of the Union speech helped to put biofuels on the map in the United States.

It's been more than four years since then-President George W. Bush told the country in his State of the Union speech that it would soon be using corn, wood chips and switch grass to power its automobiles. Biofuels, Bush said, would play a major role in helping to replace 75 percent of foreign oil imports with renewable fuels by 2025. Since then, United States government has doled out more than $17 billion dollars to help get biofuels off the ground and into our gas tanks.

Today, the industry is in a state of flux. While corn ethanol has enjoyed early success, the political climate is beginning to shift against it despite numerous powerful allies and millions of dollars in annual lobbying and advertising spending. The EPA has delayed a ruling that would increase the allowable level of ethanol in gasoline from 10 to 15 percent, and many of the tax credits and subsidies that the industry depends upon are set to expire at the end of the year.

Cellulosic ethanol has also enjoyed a great deal of government support. Hundreds of millions of dollars have been invested in research and loans to help get factories built and operating, but the fuel has yet to make a ripple in the market. POET, one of the nation's largest biofuels companies has been promising to start large-scale production for years, but has gradually pushed back the opening of its facility from 2009 to 2012.